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COST STATEMENT
ITEM Direct Material Cost Amoun t

+ Direct Labour Cost

+ Direct Expenses PRIME COST + Factory On cost/Overheads FACTORY / WORKS COST + Office & Administration Overheads TOTAL COST + Selling & Distribution Overheads COST OF SALES + PROFIT

Cost Sheet
Sales
Total cost + Profit.

Total Cost
Factory Cost + Admin Cost.

Factory Cost
Prime Cost + Factory Overheads.

PRIME COST
Direct Material +Direct Labour + Direct Expenses.

MATERIAL COST

Procurement

Storing
Issue of Material

Documents used in Material Costing

Purchase requisition

Material Requisition Note

Material Return Note /Material Transfer Note

Quotations

Goods Return Note

BIN CARD

Purchase Order

GRQCR

STORE LEDGER

Levels of Material
Minimum Level

EOQ

Levels of Materials

Reorder Level

Maximum Level

Valuation of Materials
First In, First Out ( FIFO )

Last In, First Out ( LIFO )

Average , Weighted Average

Materials Control

Go down Control
Manual Check

Perpetual ABC Inventory Analysis Control

LABOUR COST
Wage is reward for Labour as factor of Production. WAGES: Money Wages/ Minimum Wages/ Real Wages / Fair Wages. TIME KEEPING and TIME BOOKING
IDLE TIME and EFFECTIVE TIME Wages include - Salaries, Wages, Pay,

Compensations, Earnings, Bonus, Over-time, etc. Labour Laws to protect Workers interests.

Methods of Payments
Time Basis of Pay

Piece Basis of Pay

Incentives / Bonus

Methods of Payment of Incentives

Halsay Plan

Rowan Plan

Halsay Weir Plan

Taylors Differential Piece Rate System

Documents in Labour Costing

Attendance Card / Punching
Labour Incentive Card Labour Over-Time Card Wage Deductions Card

Job Card

Idle Time Card

Addl Job Card

Job Transfer Card

SALARY / WAGE SHEET

OVERHEADS/ INDIRECT COSTS

Direct Costs are directly identified with Product / Cost Centers. Indirect Costs or, Overheads are not directly identified with

Products / Cost centers.

Classification of Overheads : a. Element-wise : Indirect material, Indirect Labour and Indirect

Expenses. b. Function-wise : Factory Oncost, Admin Oncost, Selling & Distribution Oncost. c. Variability-wise : Fixed , variable and Semi Variable Overheads. d. Controllability : Controllable and Uncontrollable Overheads. e. Normality wise : Normal and Abnormal Overheads.

Treatment of Overheads
Allocation Apportionment Absorption : Under and Over Absorption. Basis of Apportionment of Overheads: Item Basis Canteen Expenses No. of Workers Rent / Taxes Area occupied Power HP / KWt General Lighting No. of Light Points Depreciation Value of Asset Supervision No. of Employees supervised Telephone Expenses No. of calls made Fire Insurance value of Stock / Asset covered

Basis for Secondary Apportionment

ITEM
Maintenance Deptt Stores Deptt Purchase Deptt Building Service Deptt Welfare / canteen Personnel / Time keeping Deptt Internal transports Deptt
1. 2. 3. 4. 5.

Basis
No. of Hours worked for maintenance No. of Requisitions attended No. of Purchase Orders attended Area of each Deptt No. of Employees No. of Employees Wt / Value of goods moved.

Absorption of Overheads:
Direct material cost basis Direct Labour Cost basis Prime Cost Basis Labour Hour Rate Machine Hour Rate.